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Lotte Chemical Corp. revealed its intention to sell its entire stake in its business unit in Pakistan called Lotte Chemical Pakistan Ltd. (LCPL). The Seoul headquartered chemical company and subsidiary of the Lotte Group is selling the asset for KRW192.4 billion or about $155.8 million.
Lotte Chemical is said to be offering its stake in LPCL to Lucky Core Industries, a Pakistani chemical firm. The price is said to be 13 times higher than its original purchase price.
As per The Korea Economic Daily, the South Korean firm is getting rid of its LPCL stake to secure extra funds and bring its business up to date. Moreover, the company is raising funds for its new growth sectors and advanced material unit.
The firm said earlier this week that it made the decision to sell all of its 75.01% stake in LCPL, which produces 500,000 tons of purified terephthalic acid (PTA) per year. The ownership will be transferred to Lucky Core Industries after the completion of the deal.
Once it obtains the funds from the sale, Lotte Chemical will use it to advance its existing petrochemicals, including polyethylene, polypropylene, and polyethylene terephthalate, to high-value-added products while scaling up the production of its advanced specialty materials as well. The company will also use part of the funds to start some eco-friendly businesses.
Last year, Lotte Chemical said that its sales target by 2030 is KRW50 trillion, and it is planning to achieve this by generating 60% of its earnings from specialty and eco-friendly materials. This seems to be achievable since it was able to record sales worth KRW18.1 trillion won in 2021.
“The sale of the overseas subsidiary is a part of the business portfolio restructuring for the vision 2030 strategy,” Hwang Jin Koo, Lotte Chemical’s president of basic material business, said in a statement. “We will stabilize the competitiveness of the existing businesses and sharpen our competitive edge by expanding high value-added products.”
Yonhap News Agency reported that Lotte Chemical’s sale of its LCPL means it will no longer engage in the production of purified terephthalic acid (PTA). It was noted that it also discontinued its local PTA production line in Ulsan in 2020. Meanwhile, the sales and purchase agreement (SPA) between Lotte Chemical and Lucky Core is expected to be signed on Jan. 26.
